Toyota Keeps Piling Into Fuel Cells As It Runs Away From EVs

Toyota keeps on running toward hydrogen fuel cells and away from all-electric vehicles in what amounts to the most decisive strategy in the auto industry for the future of alternative power trains.

At the Los Angeles auto show, Toyota executives planned to elaborate on the company's deepening investments in fuel-cell vehicles, after a weekend announcement that it would begin selling next year a model called "Mirai" -- Japanese for "future" -- that will travel 300 miles on a hydrogen tank and can be refilled in less than five minutes. The car, Toyota has said previously, will go on sale in Japan in April for about $60,000 and be introduced in the U.S. and Europe a few months later.

The company's embrace of fuel cells reminds some observers of other significant moments of commitment for Toyota over the decades, including in 1989 when it launched the
Lexus luxury brand in the United States and in 1997, when it started selling Prius gasoline-electric hybrids. Both moves redefined the American auto industry in different ways.

Now Toyota is bidding again to set the pace with fuel cells. Honda is right there with its Japanese rival, just now unveiling a near-production concept of a fuel-cell vehicle with space for five passengers, instead of four as in Honda's previous-generation fuel-cell car. Honda plans to launch it in Europe, the U.S. and Japan in 2016, Automotive News reported. Other automakers including
General Motors have demonstration fuel cells too. Meanwhile, leading global powertrain supplier Bosch has predicted that falling costs will make fuel-cell technology commercially viable for mass-car production by 2025.

But is a mass market for hydrogen cars a realistic prospect? Hydrogen power faces much the same challenges as electric-vehicle power in terms of whether a geographically vast America will have enough of a refueling infrastructure in place to make this form of alternative power train a truly mainstream phenomenon and to become so outside of a few big cities. In fact, the requirements for making hydrogen filling stations ubiquitous are greater than for populating the country with EV chargers.

And hydrogen is inherently touchy to store and transport. In fact, because of such challenges, Tesla CEO Elon Musk has called the technology "fool cells" because "they are so stupid," he told
Bloomberg.

But Toyota has its own message for Musk: Go fish. The company essentially swore off EVs a couple of years ago, citing consumers' indifference to them; and that was when gasoline prices were around $4 a gallon, instead of the current $3 a gallon. Then a few weeks ago Toyota announced that it had sold some of its $50-million initial stake in Tesla, just after Daimler announced the same thing.

Reducing its investment in EV-king Tesla followed Toyota's move last spring to phase out its 2010 agreement with Tesla for Musk's company to deliver battery packs for the co-developed Toyota RAV4 EV. Production of the SUV is ending soon after the RAV4 sold just a couple thousand units even though Musk portrayed the vehicle as the basis for a broader Toyota-Tesla partnership.

Toyota's sticker on the vehicles was almost $50,000, double the price of the gasoline-powered RAV4, and it was only sold in emissions-strict California. Because of that, some critics said that Toyota essentially sabotaged its own EV efforts. But the truth is, Toyota executives coldly concluded a few years ago that mainstream EVs simply aren't a good bet for the future even though their Prius franchise has defined and still dominates conventional electric-gas hybrids.

Now, the question is whether Toyota will have the same magic touch with its fuel-cell initiative that it did with Lexus and Prius.